Exodus of millennials threatens Metro Vancouver economy

Sarah Norman with son Arlo and dog Mags in on their street in Squamish on May 20, 2015.Steve Bosch
/ PNG

Sarah Norman with son Arlo and dog Mags in on their street in Squamish on May 20, 2015.Steve Bosch
/ PNG

Much has been written about Metro Vancouver's affordability crisis and its impact on the millennial generation, but a new report warns that high real estate prices coupled with stagnant wages could lead to an exodus of young workers and serious economic impacts for the region. Within a decade, only a few jobs identified by the B.C. government as in-demand - including senior business and construction managers - will pay enough for young workers to afford the typical mortgage in Metro Vancouver, according to a new Vancity report.RICHARD LAM
/ PNG

When Sarah Norman got married two and a half years ago, she and her husband, an engineer, started to look for a home with a bit of green space where they could start a family. They quickly realized that wasn't possible in Vancouver.

"While you can find that in Vancouver, we certainly could not afford that in Vancouver," said Norman, a 30-year-old public relations professional. "We homed in on Squamish because of A) the lifestyle and B) it was way more affordable for what we were looking for."

Much has been written about Metro Vancouver's affordability crisis and its impact on the millennial generation, but a new report warns that high real estate prices coupled with stagnant wages could lead to an exodus of young workers and serious economic impacts for the region. Within a decade, only a few jobs identified by the B.C. government as in-demand - including senior business and construction managers - will pay enough for young workers to afford the typical mortgage in Metro Vancouver, according to a new Vancity report.

Housing prices across all types of real estate are expected to rise by 4.87 per cent each year, while wages creep up by between 0.6 and 3.2 per cent.

Wage growth has lagged behind real estate prices since at least the turn of the century. Average housing costs in Metro Vancouver increased by 63 per cent between 2001 and 2014, while hourly wage rates rose by just 36.2 per cent, according to the report. In Vancouver proper during the same time period, average home resale values have jumped by a whopping 211 per cent.

Norman and her husband ended up buying a four-bedroom house in the Garibaldi Highlands for about half of what a similar house would go for in Vancouver. They now have a one-yearold son and have settled into a community of like-minded families in Squamish.

"We've met tons of other young people who have, for the same reasons, moved out of Vancouver because they can't afford it anymore," she said.

The couple still makes the tough daily commute into Vancouver, but Norman has arranged to work from home two days a week to make her life a bit easier.

Right now, the average household would need to make $123,000 to pay for the average monthly mortgage in Metro Vancouver. That will jump to an average household income of $197,965 by 2025, and even highly skilled young people starting off in careers as industrial electricians, family doctors and firefighters won't make enough to cover that, according to the report.

"More and more, people are wanting to live in the communities where they work. If these communities are not affordable, workers will look elsewhere. It is important to our local economy that people in the labour force have access to stable and affordable housing," said Andy Broderick, Vancity's vice-president of community investment.

The average real estate prices quoted in the report cover a broad range of housing types - from sprawling single-family homes to tiny condos - with an even broader range of resale values, and Broderick acknowledged that there are still cheaper options for young people who have their hearts set on buying.

"We're just trying to point out that the trends are making things increasingly difficult," he said. "The trends are significant and they've been long-term."

Young people are already leaving the city. Vancouver lost a net 1,571 people between the ages of 20 and 30 in 2013, and 770 the year before.

Meanwhile, predictions from a B.C. labour market outlook suggest that 640,000 new workers will be needed in the Lower Mainland by 2022.

Broderick and his colleagues at Vancity suggest that solutions to the housing crunch will have to target both wages and real estate prices. They advocate for businesses to get involved, pushing for affordable housing, paying "living wages" or even building employee housing if they want to attract talented workers. Young people's expectations about home ownership may have to shift as well.

The vast majority of millennials have told pollsters in surveys across North America that they plan to buy homes one day, but that may be unrealistic.

"Part of the conversation is around helping people understand that they can save and build for their future retirement or their future financial goals without owning a home," said Broderick, who rents himself.

The report recommends zoning bylaws that give developers incentives to build rentals, below-market housing options and larger suites suitable for families. It also suggests that the federal government provide tax incentives to owners of purposebuilt rental housing and that community groups like churches and legions explore options for housing developments on their properties.

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Exodus of millennials threatens Metro Vancouver economy

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